How to Improve Your Odds of Successfully Innovating? Hint: It’s a Numbers Game.
How many of Edison’s 1,000+ inventions can you name?
There is the electric light bulb, the phonograph, the motion picture camera... and more. And that’s the point. For every notable invention Edison patented, there were dozens more along the lines of his entire post on the value of failure in the innovation process. One way to think about it is to look at a very rough rule of thumb used by many venture capitalists. Among all of the investments they make, they expect:
- One third of investments fail outright
- One third of investments break even
- One third of investments generate 10X returns
If they can stick to that schedule, failures and all, they are generally making better than average returns on the portfolio overall. Granted, it’s not a sound strategy for any normal investor looking for someplace safe to slowly grow their money over time, but it’s perfect if your investments are collectively high risk/high reward endeavors. And if your innovation program doesn’t fit that description, you’re probably not actually innovating.
So, how can you improve your odds?
Reading all of this discussion of failure and risk, one might assume innovation programs are a drawn out roll of the dice. There are, however, proven ways to increase your chances of success, besides simply having the tenacity to ride out the failed iterations along the way.
- Define your area of focus Try to determine what aspect of your industry or category offers the greatest opportunity for disruptive innovation. Is it in product cost? Performance? Service model? We have another article covering a few approaches to this issue here.
- Focus your teamCreate a dedicated innovation group. Make sure they’re charged not only with creating new innovation projects, but also shepherding them—both the successes and the failures—through to completion.
- Know your end userThis may be the most important safeguard of success. Great innovation is about solving for real human needs and challenges. When component bells and whistles drop in price, should you add more bells and whistles or create a cheaper bell and whistle delivery system? Unless you know what truly matters to your existing and potential users, you have no reasonable way to determine which path offers the greatest chance for success.
In other words. Everyone rolls the dice. But smart innovators take the time to figure out where to shave off a corner here and there to make the numbers come up in their favor more often.